Retailers Report Holiday Sales Were O.K. - -January 8, 1998
here is the full text twice.virtualmarketing.com
Despite a general retail malaise that left many traditional full-line retailers scrambling to equal last year's numbers, consumer electronics and computer dealers surveyed by TWICE report a fairly favorable holiday selling season, although not one that will make any retailers' record books.
In fact, concern about a slow Christmas -- and last-minute line changes by some PC manufacturers -- left many dealers with lean inventories, resulting in some spot shortages in several product categories, including low-cost PCs, DVD players, some large-screen TVs, and even camcorders.
As usual, the reports we received from retail were a mixed bag. In general, however, audio/video specialists seemed to reap the benefits of emerging technologies such as DVD and Dolby Digital, and higher-end analog products such as S-VHS and Hi-Fi VCRs, pricier speaker systems and large-screen TVs. Stores that featured a higher mix of commodity-type products had a generally tougher time, often due to reduced availability of less profitable goods. Many of those chains, however, enjoyed strong sales of Nintendo and Sony video game systems and software.
New digital technologies, such as direct broadcast satellite (DBS), DVD players and Dolby Digital receivers were bright spots for audio/video dealers, while lower-priced PCs and heavily discounted peripherals -- particularly scanners -- helped fuel sales at computer chains, albeit at lower dollar volumes. Perhaps the best news for the industry is that retailers approached this holiday season cautiously, leaving inventories relatively lean as the industry heads into the new year.
Also strong were TV/VCR combos -- up 27% in all screen sizes -- and VCRs, particularly in Hi-Fi, although profit margins were tougher. Shaw predicted VCR shortages next year if vendors adjust inventory levels in preparation for what some believe will be a softening of the category in 1998. Shaw also said camcorder sales were strong for VHS-C models, but down in 8mm models.
However, the store had its "best month ever" in DVD video player sales during December, Shaw says, with Zenith's DVD-2000, which dropped to a $399 retail price just before Christmas, the top seller, followed closely by Toshiba's closeout SD-2006 model. Also strong was Mitsubishi's DVD player, which was used by the store in a special bundling promotion with Mitsubishi big-screen TVs. DBS sales -- both hardware and programming -- were tough from a profit standpoint due to aggressive price promoting by Circuit City, which Shaw said gave away systems at Christmas time in his area.
At Grand Rapids, Mich.-based Classic Stereo & Video, buyer Chris Davis reported overall holiday sales were somewhat disappointing, with audio sales, except for Dolby Digital, generally weak, and TV and video sales flat. The home theater store saw a strong surge in DVD player sales in the weeks leading up to Christmas, with virtually all models out of stock. Sony's DVP-7000 consistently has been his store's strongest seller, running at 30- to 60-day back order levels most of the year.
In other areas, the store reported strong sales in high-end TVs, particularly Sony XBR and Mitsubishi direct-view products, while projection TV sales saw slight gains as expected, and Pioneer Elite sets selling out of stock. Strong sales were recorded in DBS systems, with both EchoStar and Sony DSS systems out of stock. The EchoStar/DiSH system out-sold DSS at about a 2:1 ratio. The store also did well with S-VHS decks, which Davis says benefited from the strength of digital satellite equipment in the area.
At Jackson, Miss.-based Cowboy Maloney's operation, it was "a big year for digital satellite system sales," according to CEO Con Maloney. "DSS blew everything else away." Maloney said the holiday season started slowly but finished with a bang the two-days prior to Christmas. "On Christmas Eve I didn't have enough people to take care of all the customers that came into the store," he said. Camcorders, which were weak at first, saw a dramatic surge in sales the last two days, he said, while sales of DVD video and TV Internet receivers were "Okay, but not at the mass market point yet."
At NOW! AudioVideo, the five-store A/V specialist based in Hillsborough, N.C., president Ann Shachtman called the selling season through December 30 "very good," pointing to a 12% sales growth. Merchandise manager Kenny Thugut said projection TV, DVD, home theater receivers and all speakers were hot, "but car audio was disappointing. DSS was very strong once Sony shipped its new product, and EchoStar was also up, both right on projection." Projection TV and DVD gains came despite shortages of both, the company said.
At Maryland-based Myer-Emco, sales met expectations, said Jon Myer, president of the five-store A/V specialist. "We're running 6% [ahead compared to] a strong December last year, and the fourth quarter is up probably in the same neighborhood." DVD sales were strong, but because of product shortages the company was out of stock on all Sony, Pioneer and Mitsubishi models as of December 29, Myer said. Projection TV was another bright spot, "coming back strong" from a drop caused earlier in the year by HDTV publicity, Myer said. Nonetheless, total video sales will be down in December, Myer said. "We sold a lot fewer 27- and 32-inch TVs. Projection TV is where the action is."
At Salem, N.H.-based Computer Town, marketing VP Tony Violanti said "Christmas wasn't outstanding -- we saw our normal holiday season uptick, but it was nothing to write home about. What kept dollar revenues down was the move to under-$1,000 systems. So unit sales exceeded last year's, but dollars were down." Violanti also mentioned that much of New England was hit with a bad snowstorm at Christmas, which may have deterred some customers from venturing out to shop. "I'm looking forward to a strong January," Violanti said.
Among the better-selling systems for the store: "$799 and $999 Compaq Presarios, $899 and $999 Packard Bell PCs, and the low-end ($1,599) Apple 6500 Power Mac." The chain also did well with Sony's Vaio PC system. "The big surprise was scanners," Violanti says. "Flat-bed models have come down so much in price, it has helped to drive the business. Digital cameras were also very strong, particularly Apple's QuickTake 200. Apple reduced the price, and with their rebate, consumers can buy the QuickTake 200 for $169."
Among the other dealers surveyed:
* Basic TV & Appliance, Monroe, LA: VP Charles Sutton said the company was up "12% in dollars over last year," with 18" satellites moving well. "We had inventory shortages in that." Also hot were: 13" to 25" TV/VCR combos; audio shelf systems priced $199 and up; home theater in a box systems; and big-screen TVs 36" and larger;
* Plesser Electronics, Babylon, N.Y.: President Marc Howard cited a 20% increase in units and dollars, with Web TV and DSS performing well. "Web TV was a surprise -- last year sales were very poor during the holidays. But because it was $199, plus a $100 rebate instead of $299 like last year, people weren't scared off." Large-screen TV sales were "mediocre," but 31-inch and 32-inch sets "did very well because price points are now $599 and $649, instead of $799 and $849."
* American Appliance, Pennsauken, N.J.: Home office merchandise manager Steve Hassall said the holid |
